College finances in a rapidly changing sector

The head of the Universities of Wisconsin system plans to ask for $855 million in new state funding over the next two fiscal years in a push to catch up with other states. 

In a release, system President Jay Rothman pointed to Wisconsin’s ranking of 43rd among states in funding levels per full-time equivalent students at four-year public institutions, per an annual report from the State Higher Education Executive Officers Association. 

“It’s time Wisconsin stops falling behind,” Rothman said in an August video conference during which he unveiled the new funding request. “Our universities have become increasingly more tuition-dependent, and that’s not good for our students.”

Based on SHEEO figures, Wisconsin would need to spend an additional $457 million annually to reach the median funding levels of states, according to Rothman. 

Rothman’s plan, dubbed “Up to the Middle,” would freeze tuition during the period covered by the public revenue increase. 

“We won’t win the War for Talent if we don’t get Up to the Middle,” Rothman said in a statement. “We’re falling behind after years of neglect, and this budget seeks to address that trend.”

Rothman plans to submit the proposal to the system’s board of regents, after which the request would go to Wisconsin Gov. Tony Evers for his 2025-27 budget proposal.

Along with boosting state funding, Rothman’s proposal would extend the state’s tuition promise — which covers tuition and fees for lower-income students — to enrollees from families earning up to $71,000 in adjusted gross income. 

The program was suspended in 2024 after lawmakers declined to fund it. But it will return beginning in fall 2025 at 11 of the system’s universities for students whose families earn $55,000 or less. The other two institutions in the system, University of Wisconsin-Madison and University of Wisconsin-Milwaukee, have their own promise programs. 

Rothman’s proposal also would raise wages by 5% for staff and 3% for faculty, as well as create a new artificial intelligence hub. 

Rothman has been vocally calling for more state funding this year, with many of the state’s public universities facing steep budget deficits and dwindling financial reserves. 

If Evers, a Democrat, took up Rothman’s funding request, he could face an uphill battle if the state’s legislature remains in Republican control. The governor has clashed with Republican lawmakers in the past, including over funding and DEI programming. 

“While we will do our part on the expense side of the ledger, ultimately it is up to the state to decide whether it wants and can afford a weakened Universities of Wisconsin,” Rothman said this spring when unveiling in-depth financial reports on the system’s universities.

Former University of Florida President Ben Sasse defended his use of institutional funds after state officials called for an investigation into spending during his 17 month-tenure.

Spending in the university's presidential office more than tripled under Sasse compared to his predecessor, according to an investigation by The Independent Florida Alligator, an independent student newspaper.

In a lengthy August social media post, Sasse attributed the dramatic increase to "a number of important new initiatives," including reshaping the core curriculum, opening a new graduate campus in Jacksonville and improving the post-tenure review system. He denied that any part of the university had spent money inappropriately.

Sasse’s office spent $17.3 million during his first year, allocating funds to high-dollar contracts and positions for his political allies, The Independent Florida Alligator reported. In comparison, President Kent Fuchs' office spent $5.6 million the year prior to Sasse's arrival. 

The report caught the eye of Florida state officials, including Gov. Ron DeSantis. 

"We take the stewardship of state funds very seriously and have already been in discussions with leadership at the university and with the Board of Governors to look into the matter," Bryan Griffin, DeSantis' communications director, said in a statement.

Florida state CFO Jimmy Patronis called the news of the “exorbitant spending” concerning, and he said in a social media post that his department will reach out to the State University System of Florida’s board of governors to offer investigatory support.

The state auditor informed the system that the agency’s regularly scheduled audit of the University of Florida will include expenditures made by the president's office, according to Cassandra Edwards, the system's director of communications.

In his response to spending criticisms, Sasse — who resigned from the presidency in July citing family health issues — ardently defended hiring practices within his former office.

"Yes, I persuaded almost a dozen folks who had worked with me in one or more of my last three jobs, both in and out of politics, to join in this important work — as basically all arriving CEOs do," he wrote. 

The university's board and selection committee embraced Sasse’s approach to hiring, he said.

"We also cut spending and consulting expenses in some areas," he said on social media. "But countervailing accounting realities aren’t sexy amid breathless social media."

Sasse also gave a laundry list of pricey initiatives he sought to pursue during his brief presidency, including authorizing K-12 charter schools throughout the state and and partnering "with Florida’s booming space industry."

"Does everyone agree on the benefit-calculus of each of these initiatives, or on the pacing and priority-ranking among them?" Sasse wrote. "Of course not — and that is fine."

Sasse said he believed each of the initiatives he pursued would benefit the state's residents “immensely if brought to fruition.” 

It is not clear if Fuchs, who is currently serving as interim president, intends to continue supporting these goals during the university's transition period. The University of Florida did not immediately return a request for comment.

Florida residents, and the U.S. more broadly, should be debating academic reforms more, according to Sasse. 

“What is unhealthy is pretending that having reformers at the helm of a prestigious university would somehow not be...disruptive,” he said. “That was very much the point.”

Sasse also criticized the methods by which academia typically operates. 

For example, he called for "speed and flexibility rarely seen in higher education" and dismissed the university's previous faculty hiring processes as running at a "sleepy pace where status-quo bureaucracies often drift for years."

Sasse's departure as president of the University of Florida did not take him far. 

In addition to giving him full severance, the institution's trustees permitted Sasse to stay on in an alternative capacity until at least 2028, he said. The university's website lists him as president emeritus and a professor within the institution’s Hamilton Center, which focuses on Western civilization.

Sasse drew criticism from University of Florida’s campus community since the first public announcement in late 2022 that he was the sole finalist for the president job.

The former Republican senator from Nebraska supported views that were unpopular with many students and staff, and the university's faculty passed a no confidence vote in the search process that ultimately got him the job.

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By ezCater

Food is a huge part of campus life. It’s what fuels students and faculty for a long day of classes, of course, but it also helps bring people together and creates a sense of community. As important as food is to the campus experience, it doesn’t just magically appear. College procurement professionals work hard to curate a variety of food service contracts that keep students, athletes and staff satisfied. The combination of on-campus catering, dining halls, cafes and retail concepts, along with approved local restaurants and caterers creates a strong foundation for meeting college dining needs.

However, despite these contracts and preferred vendor lists, it’s not uncommon for employees to order food from outside the sphere of approved providers. This rogue food spend throws a wrench into carefully controlled budgets and vendor agreements, making it difficult to maintain order and manage spend.

What sparks rogue food spend?

Rogue food spend often stems from the need for more variety and flexibility in dining options. While contracts cover many on-campus needs, they don’t always satisfy the preferences and requirements of the entire campus community. In addition, after-hours events, off-campus travel and the demand for more varied dining experiences often lead employees to order outside approved contracts, choosing more diverse food options instead.

Rogue food spend is challenging because it often goes unnoticed until it appears on a credit card statement — and it’s hard to manage spending you can’t see. Choosing a food solution that offers greater visibility while also supporting both on- and off-campus needs can help you address the problem head-on.

Food needs extend beyond campus

On-campus food can be challenging to coordinate, no doubt, but what about the employees who need to feed students, alumni or faculty while on the road? When approved dining options aren't available or are insufficient for off-campus needs there's often little choice but to order from outside the campus system.

Athletic departments are the perfect example. Employees are responsible for providing meals for anywhere from 20 to 200 students and staff members, often in unfamiliar cities with no approved-vendor lists. Similarly, alumni professionals plan events — from tailgates and auctions to tournaments and meet-ups — that keep graduates engaged, connected and donating. Food is a key draw when it comes to attendance, but the ordering process is far from routine as many of these events take place outside of traditional mealtimes and sometimes off campus.

Since these situations are common, successfully addressing rogue food spend requires implementing a solution that provides insight into all food orders.

Increasing food spend visibility

Addressing rogue food spend doesn’t require a complete overhaul of your current campus food solutions. Instead, consider partnering with a flexible catering service that complements your existing offerings. Look for tools that provide the variety and visibility needed to effectively manage both on- and off-campus dining needs. A partner like ezCater can offer these solutions, helping to streamline your food service operations.

Proactive tracking and control

Seek tools that provide detailed insights into where and how money is being spent, allowing you to more effectively manage budgets and proactively address issues before they create a significant financial impact. For professionals who monitor spend for an entire athletics department, for example, ezCater's system allows you to create billing codes by sport, such as "FB" for Football or "BB" for Basketball – making it easy to categorize and monitor spending in real-time.

Easier payments and expenses

A flexible catering partner should simplify the payment and expense process. Look for a provider that integrates with your existing expense management systems and offers custom payment options, allowing for streamlined tracking and reporting.

For example, with ezCater, you can add custom payment options to user accounts, simplifying the check-out process with all restaurants available on the platform. Users also receive digital receipts and can benefit from integration with common expense systems, allowing for seamless expense reporting. This setup makes it convenient to manage expenses and pay a single invoice, saving time and reducing paperwork.

Budget-friendly tools

To keep food orders within budget, the right catering partner should offer tools that allow you to set spending limits on orders. This ensures that all food orders remain within predetermined budgetary constraints while still providing a variety of dining options.

Custom reporting

Look for a catering partner that offers a streamlined dashboard with custom reporting capabilities to uncover spending trends and track expenses by occasion or department. This kind of reporting helps you identify areas of overspending and adjust policies accordingly.

Tax-exempt compliance

Ensure your partner has the ability to upload and manage your state tax-exempt status for all members on the account. Automation can further simplify the process. For instance, ezCater automatically applies the appropriate tax-exempt status based on location, reducing administrative burdens and ensuring compliance.

Bridge the gap in campus dining options

While existing food service contracts and approved vendor lists serve campuses well under normal circumstances, additional flexibility is needed to address rogue food spend. The right catering partner should complement your existing food service by offering increased visibility, streamlined payments and enhanced budgeting tools. ezCater provides these solutions, ensuring a rewarding ordering experience that meets diverse needs both on and off campus.

Catawba College, in North Carolina, has received its second anonymous $200 million donation in three years, the institution announced in August.

Roughly $133 million of the new gift will be unrestricted, and the rest is designated to support Catawba's programs in environment and sustainability, an area of focus for the college.

The college's endowment has now reached over $580 million, almost seven times its value in May 2021.  

In 2021, the small liberal arts college announced its first $200 million donation — at the time the largest it had ever received.

Like the newly reported gift, a third of the first one went to its environment and sustainability programs, Catawba said. The rest funded student success initiatives, financial aid and investments in faculty. 

Catawba also received an endowment donation of $42 million in 2022.

The "transformative" trio of donations were all made anonymously, the college said. A spokesperson declined to say if the three gifts came from the same donor. 

The 173-year-old college has weathered the higher education sector's headwinds better than other similarly situated institutions.

Catawba has seen enrollment dip, though not as dramatically as some of its peers. In fall 2022, it had 1,172 students, down 12.3% from 1,337 a decade earlier.

The college only reported a budget deficit once from 2012 to 2022 — almost $5 million in 2016, according to tax filings. Many years, contributions gave a significant boost to its revenue. For example, it reported nearly $276 million in revenue for fiscal 2022, roughly 85% of which came from contributions.

Prior to the $200 million gift in 2021, the college had received $18 million in donations that year — enough to eliminate its debt. 

This May, Catawba announced it would build a new sustainable residence hall thanks to a $30 million donation. The dorm, set to be completed in August 2026, will increase its residential capacity by almost 20%. 

“We are continually amazed at the generosity of our supporters," Meg Dees, vice president of Catawba, said at the time.

Alumni support appears to be a significant factor for Catawba's giving. 

Forbes included Catawba on its list of 200 colleges with the most "grateful graduates" in 2019. The since-discontinued index tracked how many alumni donated to their college and by how much they gave.

That year, 12% of Catawba graduates gave to their alma mater, the same rate as those at Columbia University, for example.

Western Illinois University plans to cut 57 faculty positions — 40 of which are tenured or tenure track — and 32 staff positions as part of an effort to become more fiscally sustainable, the institution said in August.

The public university will also move 16 positions from its Quad Cities campus to its main Macomb campus in 2025 as the university streamlines operations and adjusts its offerings at Quad Cities to focus on select areas.

Those moves follow earlier budget initiatives by the university that included a hiring freeze, reducing student aid, elimination of 100 vacant positions, the nonrenewal of 35 faculty contracts and departmental consolidation.

Western Illinois joins an ever-growing list of institutions that are downsizing their operations to manage financial pressures.

“In order to address financial stability, we must recognize that our institution, like so many others across the country, must be the right size and the right shape to serve this number of students,” Western Illinois Interim President Kristi Mindrup said in the release. 

As Mindrup alluded, the university has faced steep enrollment drops in recent years. Between 2017 and 2022, fall headcount fell 19% to 7,643 students. And that figure is down by 39.3% from 2010 levels, per federal data.

With enrollment dropping and costs increasing, Western Illinois has wrestled with mounting budget deficits. In fiscal 2023, its deficit rose to $12.5 million from $4.1 million the year before, according to its latest financials. 

As it tries to shrink its budget and operations, the university said it has worked to minimize the impact on students and maintain “high-quality academic programs, excellent services and engaging on-campus experience.”

The university said it would “actively explore new revenue opportunities and cost-saving measures to stabilize the budget,” adding that it would look to attract new markets of students, increase retention and transfers, and respond to workforce development needs. 

The university’s governing board authorized the institution to make cuts during a meeting earlier this month. Before Western Illinois published details on Aug. 9, the cuts drew protests and criticism from students, staff and employee union leaders.  

“Layoffs are not a plan,” Merrill Cole, president of the Western Illinois chapter of the University Professionals of Illinois — which represents faculty and staff — said in a statement before the full details were announced. “They are a desperate attempt by this administration to appear as if they are taking bold action.”

A damning 176-page independent investigative report into a questionable $238 million gift to Florida Agricultural and Mechanical University concluded that the donation was fraudulent. 

Florida A&M officials announced the gift — from Gregory Gerami, a Texas hemp farmer — during the historically Black college’s May 4 commencement ceremony. Although the donation was initially met with praise, questions quickly arose about the gift’s legitimacy and Gerami’s background. 

Before the announcement, Gerami provided the only valuation of the gift — purportedly millions of dollars worth of privately held stocks in his company, Batterson Farms Corp. Confirming doubts about the gift’s value, the investigation released in August concluded that Gerami’s valuation was “baseless.” 

Growing scrutiny over the deal’s legitimacy caused Florida A&M’s board of trustees to launch an investigation into the deal the same month it was announced. The probe came after then-president Larry Robinson said the university was pausing the gift. 

The public university’s top leaders faced steep fallout. Amid accusations that the institution had botched the vetting process, Shawnta Friday-Stroud stepped down as vice president for university advancement and executive director of the FAMU Foundation in May. Robinson ultimately resigned as president in July.

The Aug. 5 report from law firm Buchanan Ingersoll & Roone adds fuel to the criticisms. The firm contended that Florida A&M could have largely avoided the fallout if officials had conducted due diligence last year when Gerami first reached out about making a donation. 

“The evidence collected in this investigation supports the conclusion that senior leadership at the University were deceived by, and allowed themselves to be deceived by, the Donor,” the report stated. “Neither Batterson Farms Corporation nor any of its affiliated companies had the resources available to meet the promises made in the Gift Agreement.”

The report made several recommendations, including that Florida A&M notify Gerami that the donation was never legally executed. It also flagged issues with Friday-Stroud serving in two roles, recommending that they be broken up into separate positions and for due diligence be included in those job descriptions. And it recommended that the university get an independent audit conducted into noncash gifts before accepting them. 

Gerami did not respond to emailed requests for comment sent to Batterson Farms Corp. University officials also did not respond to requests for comment. 

The report cast further doubt on whether Gerami’s businesses were legitimate. 

“His ventures have been significantly tainted by reports of fraudulent and manipulative tactics, and a web of deceit that entrapped investors and associates,” the report said. 

The law firm's report details Gerami’s attempts to secure investors for a new company, BadaBing, which he pitched as an online store, including for clothes and accessories. As part of a “fraudulent scheme,” the report said, Gerami claimed he maintained strong relationships with colleges that would provide the company with access to their extensive email lists for marketing purposes. 

“However, as the launch date neared, it became apparent to his associates that Mr. Gerami neither had relationships with these universities nor access to their email lists,” the report stated. 

Moreover, Gerami was behind a collapsed $95 million gift promised to Coastal Carolina University in 2020. In 2023, The Sun News reported that the donation fell through after Gerami’s relationship with university officials soured. 

In Florida A&M's case, the law firm noted officials had multiple opportunities to conduct due diligence or raise concerns about the veracity of the gift. 

Robinson and Friday-Stroud were both directly involved in overseeing the gift, creating an environment where staff “felt pressured not to ask questions” and “to assume that proper due diligence had been performed,” it stated. 

Neither Robinson nor Friday-Stroud, who both retain faculty positions at Florida A&M, responded to emailed requests for comment. The university announced in July that Robinson planned to go on a yearlong sabbatical after leaving the presidency. 

The report also pointed out that Keith Miles, the university’s communications director, conducted “substantial research” into Gerami’s background to help him write a speech for the commencement ceremony — a process that unearthed derogatory information. 

“Mr. Miles chose to ignore these concerns and did not report them to anyone else, assuming others were in charge of vetting the donor and gift,” the law firm said. Yet Miles wasn’t alone, the report said, noting it was clear “everyone assumed someone else had already performed the necessary due diligence.”

Miles did not respond to an emailed request for comment. 

Friday-Stroud’s multiple roles didn’t help, according to the report. 

As both the vice president for university advancement and executive director of the institution’s foundation, Florida A&M was left without a “proper chain of command for individuals to raise concerns or seek financial advice without appearing to undermine her authority.”

In what was described as a "critical oversight" and a "significant lapse in due diligence," the report also criticized officials for not getting an independent valuation of the gifted stock and instead relying solely on Gerami’s claims.

The law firm contended that officials failed to make the governing boards of both the university and the foundation aware of key information about the donation. This lack of information prevented both boards from fulfilling their fiduciary duties, the report said.

Bloomberg Philanthropies is donating $600 million to the nation’s four historically Black medical schools to help strengthen their endowments and diversify the medical field, according to an August announcement. 

Howard University’s College of Medicine, Meharry Medical College and Morehouse School of Medicine will each be gifted $175 million, while the Charles R. Drew University of Medicine and Science will get $75 million. 

The philanthropic group will also give $5 million to the Xavier Ochsner College of Medicine, which is currently under development. The institution — a collaboration between Xavier University of Louisiana, a historically Black college, and Ochsner Health — is slated to launch in downtown New Orleans once it secures preliminary accreditation. 

Bloomberg Philanthropies — founded by businessman and former New York City Mayor Michael Bloomberg — has made investing in medical education a priority. 

The latest round of donations comes just one month after the organization announced a $1 billion donation to Johns Hopkins University to make medical school tuition-free for students with household incomes under $300,000. 

This also isn’t the first time Bloomberg Philanthropies has donated to the four historically Black medical schools. In 2020, the organization gave $100 million total to the institutions. And in 2021, it gave another $6 million total to the institutions to help them provide COVID-19 vaccines to underserved people in their communities. 

The new gifts to medical schools are part of the organization’s Greenwood Initiative, which aims to remedy chronic “underinvestment in Black institutions and communities,” the organization said in the announcement. 

“We have much more to do to build a country where every person, regardless of race, has equal access to quality health care — and where students from all backgrounds can pursue their dreams,” Bloomberg said in an August statement. 

“By building on our previous support, this gift will empower new generations of Black doctors to create a healthier and more equitable future for our country,” he said.

The announcement pointed to long-standing disparities in the medical field. 

In 2021, Black or African American people made up 12.1% of the U.S. population, Census estimates show. Yet only 5.7% of practicing physicians were Black or African American in 2021, according to a report from the Association of American Medical Colleges. 

Meanwhile, recent research links higher representation of Black primary care physicians to greater longevity for Black individuals. 

“Inequity in our healthcare systems is far too great a cost to our economy and our collective well-being,” Garnesha Ezediaro, head of the Greenwood Initiative, said in a statement. “Ultimately, the benefits of this gift will be realized in the communities where the next generation of Black doctors practice and among patients who receive their care.”

Leaders of the four historically Black medical colleges praised the donations upon their announcement. 

Howard officials said the new funding will help the institution’s medical school manage increasing tuition rates and support research. 

“Because of this day, the onus of the financial commitment that usually hangs over the head of many minority medical students will be lifted,” Dr. Andrea Hayes Dixon, dean of Howard’s medical college, said in a statement. 

Meharry Medical President, Dr. James Hildreth, said the donation marked “a momentous day” in the institution’s 148-year-old history, accelerating its “mission to serve the underserved of our nation and world.”

Dr. Valerie Montgomery Rice, president of Morehouse School of Medicine, said the donation would provide solid financial footing for the institution. Officials there noted that Bloomberg Philanthropies’ previous donation to the medical school — $26 million in 2022 — helped lower debt levels for its student body. 

In the 2019-20 academic year, over 4 in 10 Morehouse School of Medicine graduates held at least $250,000 in debt. By 2023-24, that share shrank to a little under 19% of graduates, according to the institution’s announcement. 

A 2020 $7.7 million gift from Bloomberg Philanthropies to the Charles R. Drew University of Medicine and Science helped the institution get preliminary accreditation for its four-year medical degree program, which enrolled its first class in fall 2023, officials said in an announcement. 

“CDU’s MD program is new, and this donation adds a level of stability that will further our capacity to improve the health, economic development, and opportunities for the children in our surrounding communities and others like them,” Dr. Deborah Prothrow-Stith, dean of the institution’s medical college, said in a statement.

Frostburg State University, in Maryland, unveiled a plan in August to cut more than $7 million from its budget to remedy a structural deficit. 

The plan entails cutting some 30 faculty positions by the fall 2025 term, and an additional 15 jobs by the spring 2026 term, a spokesperson said. The public university expects the faculty cuts to save $3.9 million in the 2026 fiscal year and $4.8 million in the 2027 fiscal year. 

Frostburg also plans to reorganize its administration to save $1.7 million in fiscal 2025 and beyond, reduce athletics spending to save $883,000 and make cuts to operations to save up to another $1 million. 

The university’s first round of faculty cuts will include employees with less than two years of service, while the second round may include those with more, the spokesperson said. 

Frostburg will also merge four administrative units into two — combining its advancement division with the regional development and engagement office, and merging academic affairs and student affairs. Those changes will eliminate two vice president positions. 

Additionally, the university plans to reorganize deans’ offices across its three colleges. Each college will have two assistant deans, who will spend half their time on administrative work and the half on teaching. 

Frostburg anticipates the moves will eliminate its $7.7 million structural deficit and lead to a surplus of up to $3.2 million in fiscal 2026. By fiscal 2027, university officials project that surplus could grow to $4.2 million. 

Frostburg, which is part of the 12-institution University System of Maryland, attributed its budget woes to issues plaguing regional universities nationwide. 

“Fewer high school graduates, the lingering impacts of COVID, and the problem-laden rollout of the new FAFSA (Free Application for Federal Student Aid) form have all had a hand in declining enrollment,” top leaders said in an Aug. 1 message to students and parents. 

The public university pointed out that its enrollment has fallen faster than its faculty headcounts. 

According to the announcement, enrollment of full-time-equivalent students has dropped 36% since the 2010 fiscal year. But over the same period, full-time faculty counts declined by around 14%. 

The university enrolled 4,067 students in fall 2022, according to federal data. 

Enrollment losses have led to lower net tuition and fee revenue: $17.3 million in fiscal 2023, down 38.4% from five years prior. 

The institution this summer assembled a budget review team composed of faculty, staff and students to help identify ways to plug the deficit. 

“FSU's plan will be a multi-year effort that will focus on the best interests of students and the institution,” the spokesperson said, adding that the time frame for carrying out each element will differ. 

Frostburg’s announcement also attributes its financial troubles to lower state funding. The spokesperson said cuts to the University System of Maryland’s budget in fiscal 2025 led to a $1 million reduction in funding for Frostburg. 

The state also hit the institution with even more recent cuts. 

In May, Maryland Gov. Wes Moore signed a state budget providing roughly $57 million in general fund appropriations and over $3 million in special funds to Frostburg for the 2025 fiscal year.

However, in July, Moore proposed $150 million cuts to the already approved budget. Officials attributed the need for the cuts in part to Medicaid enrollment outpacing projections and a state-subsidized child care program continuing to grow, Maryland Matters reported. 

The Maryland Board of Public Works approved the cuts in mid-July. More than one-third of the slashed funds had been allocated to the state’s universities and the Maryland Higher Education Commission.

The Frostburg spokesperson said this led to a further $546,000 reduction in funding for the university. 

The University System of Maryland will give Frostburg financial support if the institution is able to implement its plan, according to the announcement.  

The system will either make certain payments on behalf of Frostburg or give it one-time permission to defer some expenses in fiscal 2025, such as required pay increases or bond payments, the spokesperson said.

This spring, the price of college rode the news cycle again as headlines featured an eye-popping $100,000 in attendance costs at Vanderbilt University.

The biggest share of that figure is Vanderbilt’s tuition price, which federal data puts at a hair under $64,000 for the just-ended academic year. That price is up in the stratosphere with the most expensive institutions, such as Columbia University, with its $69,045 tuition for 2023-24.

But as many higher ed insiders and observers know well, those tuition figures are incomplete at best, misinformative at worst. The majority of students, especially in the private nonprofit world, receive substantial tuition discounts through various forms of institutional aid. That makes prices complicated, to say the least.

“It's one of the few sectors where what you pay isn't what it costs, and then what it costs isn't what you're charged,” Fitch Ratings Senior Director Emily Wadhwani said. “It’s sort of opaque.”  

The practice of marking down tuition sticker prices is decades old and comes with few benefits at this point, many experts say. It can mislead students and muddy the conversation around the value of a college education, while for institutions tuition discounting can wear on revenue and finances in a competitive environment. 

“It's not good for anybody. It's not good for the students. And it's not good for the institutions,” said Phillip Levine, an economics professor at Wellesley College, in Massachusetts, and author of the book “A Problem of Fit: How the Complexity of College Pricing Hurts Students — and Universities.”

“If you interviewed university leaders and institutions that are doing this, they will tell you it doesn't make sense,” Levine added. “But there's no way to get out of it.”

‘Ignore the sticker price’

While rising sticker prices grab headlines, net tuition — or the cost of tuition and fees after deducting grants and scholarships — is under pressure amid heavy competition for students in the higher ed world. 

According to Fitch’s Wadhwani, colleges rated by the agency raised net tuition and fees by 1.1% on average in fiscal 2023. 

That represents modest growth as expenses continue rising for colleges — and is not enough to preserve margins, Fitch said in July. The ratings agency expects growth to remain around 2% to 2.5%, or lower, annually.

A recent study from the National Association of College and University Business Officers found that net tuition and fee revenue per first-time, full-time undergraduates in the 2023-24 academic year rose on average by just 0.5% at four-year private nonprofit colleges. 

But, after adjusting for inflation, that revenue actually declined by 1%. And that followed a “historic” 5.4% drop in inflation-adjusted revenue between the 2020-21 and 2021-22 academic years, according to NACUBO. 

At the same time, tuition discounting among private nonprofits hit a new high of 56.1% in 2023-24.

Those are only averages. Net tuition costs for students and their families depend heavily on their economic backgrounds. As family income levels rise, so do net tuition costs, as many colleges provide need-based aid to help diversify their student bodies. 

For a family with an annual income of $50,000, net tuition at private colleges rose 23.6% to $24,600 between the 1995-96 academic year and 2019-20 after adjusting for inflation, according to recent research by Levine. For those families, the difference between sticker and actual costs in 2019-20 was $46,300.

For a family with $250,000 in annual income, net tuition at private colleges increased 42.6% to $52,900 between 1995-96 and 2019-20. And while higher-income families paid closer to the sticker price, they still saw an $18,000 gap between sticker and net price in 2019-20, according to Levine’s analysis. 

That disparity has in fact widened over time. In 1995-96, the gap was just $2,500.

Discounting is much heavier at private colleges, which are free to raise tuition as high as the market will bear, unlike many public institutions that are bound by state boards. However, discounting often occurs at public institutions as well. In 2019-20, the gap between sticker and actual costs hit $15,100 for lower-income students at public colleges and $3,900 for families making $250,000. 

Even with efforts to tailor pricing to need, lower-income families still face rising college costs.

“The number that bothers me the most is the increasing costs for the low-income kids,” Levine said. “If you're making $50,000 or under, you still have to come up with almost $20,000, which is essentially impossible.”

Competitive markets, complicated pricing

 Overall, given the gap and what different families pay, Levine calls it a “huge disservice” on the part of the consumer media to report “every time that school X raises their tuition from $80,000 to $90,000” and say, in effect, “‘Look how expensive college is!’”

He added: “Ignore the sticker price. It is a meaningless number. It tells you nothing.”

Those degrees of difference between sticker and net price add a layer of complexity for both students and colleges. 

As Lucie Lapovsky, principal of Lapovsky Consulting, explains, boards typically set the tuition price — but control over the net price can be indirect as colleges adapt to market pressures.

“Schools which are giving out a lot of merit [aid], they are playing in a very competitive market,” Lapovsky said. “A school wants a certain amount of students at a certain academic level or a certain set of criteria, and they want a certain net tuition. Unfortunately, it is very hard to control all of those variables or even many of them.”

Trying to tailor aid — and hence price — takes complicated statistical crunching. Often colleges turn to outside firms that can build what’s called a leveraging matrix for admissions offices.

“That tells you that a student with XYZ characteristics is likely to enroll at 10%, 20%, 30% [probability] if you give them X dollars” in aid, Lapovsky said. 

Stacey Linderman, a consultant who works with the National Association of College and University Business Officers, noted that all of these calculations and considerations are highly specific to the institution. Pricing depends on their region, their competitors, their aspirations and, not least of all, their job placement rates for graduates, among other factors.

“It is very complex for some, and it's individualized for some institutions,” Linderman said. She added that for some colleges, the current pricing system is working for the individual goals they’re trying to achieve. 

What such calculations can’t do is tell colleges with certainty if students will actually accept admissions offers. That is where all the careful efforts to tailor prices, set net tuition levels and plan for an institution’s financial life can break down. 

As Lapovsky noted, after the aid offers and acceptance letters go out to students, a college's prospective student body for the upcoming year could fall short of targets.

“Many schools are forced to increase their awards,” Lapovsky said. “Parents come back and negotiate and say, ‘School X gave me this, you only gave me that.’ Or [colleges] just aren't getting enough deposits.” 

Colleges in those situations find themselves in a trade-off between boosting enrollment by discounting more and facing lower net tuition per student. 

Competition leads institutions "to be pretty aggressive with their pricing,” Levine said, expressing one of the fundamental attributes of a market.

Discounting tuition and fees to draw in students can of course create both fiscal and opportunity costs for colleges. The majority of institutional aid comes from undedicated funds such as general funds, unplanned contributions, foregone revenue and other sources, according to NACUBO. And roughly 30% of institutional aid is covered by colleges’ financial reserves.  

A ‘psychological strategy’

 A growing gap between net tuition and sticker price begs the question: What’s even the point of the sticker price?

Among experts Higher Ed Dive spoke with, the most common answer is simple: Marketing. 

“It's deliberate. It has everything to do with the perception of value,” Fitch’s Wadhwani said. “There are exceptions to this, but every parent would rather say, ‘My kid got a $40,000 scholarship to an $80,000 school’ than just pay the $40,000.”

She added, “There is a philosophical and psychological strategy at play — and that's really hard to unwind.”

Others offered similar explanations. 

“A high price signals something — it signals quality,” Levine said. “People are thinking, ‘Wow, this great school is charging a lot, and they love me because they're giving me this $10,000 grant.’ And that's really effective.”

James Dean Ward, principal of policy and economic research at nonprofit Ithaka S+R, described this as the “Chivas Regal effect” and said this psychology is “a huge benefit of discounting on the back end” for colleges.

“Research shows that when students receive a presidential scholarship or a provost scholarship, it makes them feel happy and excited,” Ward said. “And that can be an important tool for enrollment managers to use to entice these students to accept their offer of admission.”

At the same time, high sticker prices run the risk of turning off some students from applying in the first place. 

“Higher sticker prices can have a different effect on different groups of students,” Ward said. “It may induce sticker shock amongst lower-income students.” 

‘Resets are not going to be a silver bullet’ 

 Convoluted as the pricing system might be, there is no easy off ramp.   

As Levine noted, one fairly straightforward — but illegal — fix would be for institutions to work together on pricing.

Elite colleges have indeed tried such a tactic in the past, and they’ve been sued under antitrust laws. The U.S. Department of Justice reached a consent decree in the 1990s with Ivy League schools in such a case, and more recently top-ranked universities settled a price-fixing lawsuit brought by private plaintiffs.

A more legally sustainable strategy is the so-called tuition “reset,” where colleges realign their sticker prices to be closer to their net prices. That typically means a substantial drop in the sticker price. 

A 2023 paper by Ward and co-author Daniel Corral, a higher education professor at the University of Toronto, found some evidence of potential short-term effects from tuition resets. But they concluded there was “minimal evidence” that tuition resets increase enrollment in the long run. Moreover, the researchers saw no relationship between resets and net tuition revenue, and said their findings “call into question the efficacy of this practice.”

In an interview, Ward explained that most of the price changes after resets were canceled out by changes in institutional aid. “They're just kind of shifting their discounting practice from the back end to the front end,” Ward said. “Resets are not going to be a silver bullet for solving financial issues at the institution.”

If high sticker prices and discounting are a form of marketing, then so too are resets, at least in some cases. Resets often garner heavy media coverage. This can be one potential short-term benefit of the strategy, bringing positive attention to colleges in need of more students to boost revenue, Levine said.

“Institutions that reset aren't doing it because they're high-minded,” he said. “They're resetting because they're in trouble. And they're looking for some savior, some saving strategy that's going to get them out of the hole that they're in.”

But among institutions that have tried resets, outcomes differ, Ward noted. 

“We found that effects would vary with the size of reset, which is not surprising,” he said. “Not only will students interpret the size of the reset differently, but it also probably indicates institutions are engaging in different behaviors. Cutting sticker price by 5% is very different than cutting it by 50%.”

Communication, timing, board involvement and other factors are key to making a tuition reset work, some research has found. 

From her work with institutions, Linderman said resets succeed most often at the program level. Based on the costs of delivering education, “the price of an engineering degree is going to be very different than a business degree and be very different than a liberal arts degree,” Linderman said. 

And just as sticker prices and discounts can have differing impacts on socioeconomic groups of students, so can resets — which if nothing else provide more straightforward pricing information. 

Ward and Corral found, for example, that enrollment of Pell Grant-eligible students increased after tuition resets at private nonprofit colleges. One reason for that, Ward said, could be that those colleges were trying to address affordability and help lower-income students get in the door. 

“We know that lower-income students are more price sensitive generally,” Ward said. “They may face a higher level of sticker shock. So the reset may help with that.” 

As for simply deepening the tuition discount, Lapovsky said that typically leads to an enrollment decline. Colleges can — on paper — control their prices and their discounts, but they can’t control demand for what they are offering. And that raises issues beyond prices.

“We have too many schools,” Lapovsky said. “So they're all fighting for more and more students.”   

Johns Hopkins University's medical school will offer free tuition to students who come from families earning less than $300,000 a year following a $1 billion donation from Bloomberg Philanthropies. 

Almost two-thirds of the Maryland university’s current and incoming medical students will be immediately eligible this fall, Johns Hopkins said in August. It will send updated financial aid packages to eligible students this summer.

The university will also cover living expenses for medical students whose families earn $175,000 or less annually.

Michael Bloomberg, founder of Bloomberg Philanthropies, is an alumnus of Johns Hopkins with a history of charitable giving to the university.

The businessman and former mayor of New York gave $1.8 billion to Johns Hopkins in 2018 to create a need-based student aid fund for undergraduates. 

Since then, the number of Johns Hopkins undergrads who come from low-income families or are first-generation college students has risen by 43%, the university said. These students now make up almost one-third of the university’s undergraduate student body. 

"Extraordinary talent exists in every community across America, a fact borne out by the transformative impact of Mike Bloomberg's historic gift for financial aid to Hopkins undergraduates six years ago that dramatically expanded the breadth of experience and accomplishment of our student body," Johns Hopkins President Ron Daniels said in a statement.

Removing financial barriers for students benefits not just the medical field but society as a whole, Daniels added.

Likewise, Bloomberg said, "By reducing the financial barriers to these essential fields, we can free more students to pursue careers they're passionate about — and enable them to serve more of the families and communities who need them the most." 

Only 11.9% of U.S. families earned over $200,000 in 2022, according to federal data from the Census Bureau.

Bloomberg's latest donation will also expand financial aid for a handful of other graduate programs — including public health, nursing and international studies — to expand access to students from middle- and low-income families.

Johns Hopkins is not the first institution attempting to tackle the high cost of medical education and the barriers it creates.

New York University was at the forefront of the trend when it announced in 2018 that all of its medical students would receive full scholarships moving forward. It funded the program through a series of donations, including $100 million from Home Depot founder Ken Langone and his wife Elaine. The couple has since given even more, $200 million, to further expand the full-tuition scholarship program.

And Albert Einstein College of Medicine, in New York, will go entirely tuition-free this fall, thanks to a $1 billion donation in February from its board chair, Ruth Gottesman.